2. The focus in this seminar is on
Investing for Retirement
Personal Savings are split into:
– Taxable Savings Our
• Bank accounts, CD’s focus
• Investments today
– Non-taxable, retirement savings
• 401(k)
– Traditional & Roth
• IRA
3. Perspective on Retirement
• We are responsible for
our retirement
success, no one else
• Harsh realities require
focus, attention and
more ownership of our
retirement account(s)
4. Retirement 2.0 – A New Look
• Your retirement is unique;
don’t be pressed into an
obsolete mold
• Retiree’s are
healthier, living
longer, more active
• Consider need for extra
income or benefits
• Working longer, part-time
work, consulting or other
self-employment
5. Create a Retirement Vision
• No one knows what the
future holds
• Basics
– Spend less than you make
– Be a great saver
– Eliminate debt
– Be creative
7. Keep Going
• Compound growth
takes time to build Example of Compound Growth
• Largest effects felt 575,000
after years of saving
and investing 475,000
• Cannot shortcut
375,000
process
• Chart based on 275,000
– 10% contribution rate
– 5.14% annual rate of 175,000
return
75,000
– 2% annual salary
increase 50 55 60 65
– 3% annual inflation
8. Get Going
401(k) Scenarios
• Beginning salary
575,000
– 50 yr old: $82,000
– 55 yr old: $91,000 475,000
520,490
– 60 yr old: $100,000
• Contributes 10% 375,000
• Includes Amway 344,417
match 275,000
• Retires at 67 years
175,000 212,357
old
75,000
50 year old 55 year old 60 year old
9. Focus on Contributions
Contribution Scenarios
(50 yr old)
825,000
• Your contributions
779,311
today decide your
quality of retirement 649,901
575,000
• Target 12% to max
allowable of $22,500 520,491
• Increase 416,962
gradually, but as 325,000
quickly as possible
75,000
6% 10% 15% 20%
10. Manage Spending
• Work on your spending
habits first; then your
savings
• Use a personal financial
management tool
– Mint.com
– Quicken Books
– Excel spreadsheet
– Paper / Envelopes
11. 401k Basics – Traditional 401k
• Pre-tax savings provide highly efficient
savings tool for building your nest egg
• Taxed as income when you withdraw
from account (available without
penalty anytime after 59 ½ yrs old)
12. 401k Basics – Roth 401k
• Post-tax savings provide highly
efficient savings tool for creating tax-
free income upon retirement
• Tax-free income when you withdraw
from account (available without
penalty anytime after 59 ½ yrs old)
13. 401k Basics
Traditional 401(k) Roth 401(k)
• Contribution is taken out of • Contribution is taken out of
paycheck before tax paycheck after tax
• Investments grow tax-deferred • Investments grow tax-free
• Taxed as ordinary income upon • Tax-free upon retirement
retirement • Distributions without penalty
• Distributions without penalty allowed after 59-½
allowed after 59-½
14. 401k Basics – Roth Distributions
There is no penalty or tax
on a Qualified Distribution
• 5 year rule: to be a
Qualified Distribution, it
must be 5 years from Jan 1
of the year of your first
contribution
AND
• You must be at least 59-½
OR
• Qualify for early distribution
– First home
– Disabled
– Made by your estate
IRS Pub 509
15. 401k Basics – Amway Match B & PS
• Amway matches 50% of
your contributions in any 3%
combination of traditional B & PS
and Roth, up to your 6%.
• Amway match is always 6%
3%
deposited into traditional B & PS
account.
• Amway’s discretionary B & PS
3% 5%
base contribution & profit B & PS
sharing is deposited into
2% 2%
traditional account 9%
1.5% 1%
• 2012 IRS employee 1% 5%
4%
contribution limits: 2%
3%
– $17,000
– $22,500 with “catch-up” Amway Base & Profit Sharing Amway Match
Roth Contribution Traditional Contribution
16. How Your Amway 401k Works
Amway 401(k)
• Investment options are
the same for Traditional
& Roth
Roth
• Select contribution % 401(k)
for each – any
combination is
allowable
Trad
• Accounts shown in 401(k)
aggregate on Fidelity
website
17. Common Amway Myths
• 15% Contribution Max
– You can contribute up to
70% of your salary or the
IRS limits, whichever is
greater
• You have to roll your $
into an IRA upon
retirement
– Sales technique
– You can leave your $ with
the Amway plan if you
have more than $5k
18. Glossary of Important Investment
Terms
• Stocks - Fractional ownership in company (Equity)
• Bonds - Money lent to company (Debt)
• Mutual Funds - An account consisting of a combination of multiple
companies’ stocks and/or bonds
• Asset Allocation - The apportioning of investments to the different
asset classes: stocks, bonds & cash (main 3)
• Diversification - The apportioning of investments to the different
asset class sub-classes
– Stocks
• Large, mid & small cap
• Value, growth & blend
• International, specialty
– Bonds
• Gov’t & Corporate
• High yield, inflation protected, low duration, etc
– Cash
19. An Analogy for Understanding
Asset Allocation
• Your Personal
Investment Recipe
• Mutual funds =
Ingredients
• Recipe = How you mix
Ingredients
21. Focus on Risk
• Risk plays a much larger
role in an account with
a balance
• A 10% downturn costs
far more (in dollars and
cents) now that it did
10-15 years ago
• Now have fewer years
until you need the
money – not enough www.mutpl.com
time to recover from
downturn
26. Retirement Fund vs. College Fund
• Adequately funding
your Retirement
comes 1st
• College funding must
be secondary
• Our children will
probably have
options available to
them to help pay for
college
• This is your ONLY
retirement funding
opportunity
28. Personal Consultations
• Determine a plan of action
for to put your retirement
in focus
• Free for all Amway
employees
• Spouses are welcome to
attend
• What to bring:
– Fidelity login credentials
– Outside asset list
– Social Security Statement
– Target Retirement Year
– Estimate of monthly income
needs
29. Thank You
Schedule your personal consultation now!
Visit http://amway.bemanaged.com
Contact us at (616) 871-0751 or (888) 738-8780
Editor's Notes
Retirement investing vs non-retirement investmentsFocus on retirement in this seminar
Focus on being mortgage-free upon retirement (imagine what you could do without that payment)
The longer your money is invested, the more compounding you have for it to grow.
NOTE: The amount you contribute to your account is the #1 reason for the outcome of your retirement, not how you invest it.Target 12% - 20% of your salary
Get your spending habits in line, and your savings will take care of itself – PAY YOURSELF FIRSTHighly recommend a personal financial management toolMint.comQuickenSpreadsheets
Pre-tax savings provide highly efficient savings tool for building your nest eggWithdrawals (401k paycheck) taxed when you retire (available anytime after 59 ½ yrs old)
Pre-tax savings provide highly efficient savings tool for building your nest eggWithdrawals (401k paycheck) taxed when you retire (available anytime after 59 ½ yrs old)
Taxes are “pre-paid” with your contributions, investment and contributions come out tax free upon retirement (after 59 ½ yrs old)Allows you to create more flexibility upon retirement by creating a ‘tax free income’ retirement bucket
Investment options are identical for each plan, you simply need to determine what % goes in pre-tax (traditional) and after-tax (Roth)